I really can't, but I suspect it has to do with hedging short positions elsewhere. Maybe bonds. It seems that awhile back Piptaker was saying here that commercials were net long the Euro in the COT report. That was when euro was much higher. It was in this thread. So I just watch the price and the overall backdrop. Hard to be bullish Euro here.
It's like this. First Greece. Then Britain. Maybe now Italy. Different circumstances in each case, but a tapestry of problems. It's not the USA where there are individual states but a common government. And the technical picture stinks too. That doesn't mean it can't rally temporarily. But the writing is on the wall. Which can make it hard to trade, because everyone thinks it's in trouble and everyone can't be right in trading, so you need to have some shaken out of their positions.
This is the corresponding weekly chart for EURUSD. EURUSD is clearly in bearish sentiment and Yes, last week's appreciation appears to be a rally. Did you happen to know when the actual date is for US dollar interest rate change? Red circles represent price correction by speculators
There's just so much debt in the periphery of Europe and not much growth it seems. Eventually things will change. It's like the old joke--The only two things i dislike are change and the way things are. You can't have a social welfare state go on forever. But nobody but the fringe wants to do anything about it, cause their hands are already in the cookie jar. These problems have been around for a long long long time such that it seems they will never have consequences. Maybe soon. There just needs to be a catalyst or series of events like 2008. Will that be the big event that finally causes debt repudiation? I don't know. But I do know that we are in the middle of the largest debt bubble in history, just by the numbers.
Italy has a bit excessive debt and so is Japan ( so expect Yen to depreciate even more) Most european members have cash deficit... Inflation is not too bad though. Overall status indicates that EURUSD will depreciate soon when there is an actual interest change in US dollar, especially given that interest rates offered by european members are not very attractive.
hmmm a negative interest rate in Japan...but Australian government offers some nice interest rate...so AUDUSD may not depreciate much. Look at Russia, they offer one of the most attractive interest rate!!!!!! and they will default on their bonds if they don't feel like to payback
It's about the real interest rate, not the nominal one. And I know very little about it all, other than the concept.
That's all you need to know for trading, I guess By the way, I have attached trading positions for USDJPY It looks like USDJPY will continue to strength... No wonder given that excess debt ratio in Japan
So that's why USDJPY appreciated (as correction )so much after there was depreciation. So the depreciation was the false picture to the fundamental information, which was caused by commercial traders
I still don't clearly get this in futures contact. When depreciation is expected (e.g. EURUSD) why commercial traders take the opposite side...exporters in Europe worry about the depreciation in EURO so they minimise price risk by taking long position does it make sense? it's not a forward contract; or are they really dump?